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Stockmarketcrash

Why Did The Stock Market Crash?Last Wednesday, I warned during my live show that the market could crash soon. And it did... The next day the NASDAQ lost more than 5% – and for the next few days it kept moving lower. And not to brag, but I pretty much nailed my prediction: I said the S&P would correct to 3,400 and then bounce back. Well, I was off by a few points. It went down to 3,330 and then bounced back. Close enough 🙂 So why did the stock market just have a bit of a flash crash? And will they keep crashing, or is the worst over now? In order to answer the question “why are the markets crashing,” let’s back off for a moment and discuss why stocks exist in the first place. At some point, a company may need to raise capital, and they don’t necessarily want to borrow it from the bank. So they sell parts of the company to investors, and these are shares. Let’s take a look at a company like Apple AAPL. They have issued 17.1 BILLION shares. Now let’s compare this to another company that has been incredibly popular this year, Zoom Communications (ZM). They have issued 194.76 Million shares. As you can see, that’s much less. EPS And A Market Crash? So in order to compare these 2 companies, smart people (way smarter than me) came up with the idea of creating a metric, the EPS, or Earnings Per Share. This metric tells you how much a company earns per ONE share of stock that they issue. So for AAPL that’s $3.30 and for ZOOM that’s $0.78. As you can see, AAPL is much more profitable per share that they have issued compared to ZM. No surprise. Now… what does THIS all have to do with the market crashing? Bear with me… you’ll see in a moment. So now you know about the “EPS” – the Earnings Per Share. The next key metric that you need to know is the “P/E” ratio. PE Ratio or Price Per Earnings The PE ratio is the “price per earning,” so you take the stock price and divide it by the earnings per share (the profit) of the company. This PE ratio tells you how much overvalued or undervalued a company is. Let’s take a look at the PE values of AAPL and ZM. For AAPL, the PE ratio is 35.79. So this means that the stock is trading at 35x the profits. For ZM, it is a whopping 490!!! The stock price is 490 times the earnings! That’s crazy! So let’s see what’s normal. Here’s the PE ratio of the S&P 500 companies. Right now, it’s 29.24, so almost 30. Apple’s PE ratio is 35, so it’s close to the average of the S&P 500 companies. But AAPL is a tech stock, and we know that the NASDAQ is the “tech index.” So let’s take a look at the PE Ratio of the NASDAQ. It’s 26.52 right now. Wait, what??? I thought everybody was saying that tech stocks are overvalued??? Well, it seems they are in line with the S&P 500, and it’s also in line with its historic averages. So why is everybody saying that stocks are overvalued right now? And why did the market crash? Well, there’s a simple explanation. Let’s dive a little bit deeper into the NASDAQ. There are 100 companies in the NASDAQ Index, and here’s how they are weighted. As you can see, the Top 7 companies make 50% of the weight of the index. We already looked at Apple and know that their P/E ratio is at 35 right now, and that’s AFTER the correction. So it’s still higher than the average of 26.52 but not too crazy. Let’s take a look at the others PE Ratio: 2.) AMZN: 126. 3.) MSFT: 37 4.) FB: 33 5.) GOOGL: 34 6.) GOOG: 35 7.) TSLA: 907 So as you can see, these 7 companies currently account for 50% of the NASDAQ, and are all trading higher than the average, with AMZN and TSLA being crazily overvalued. And simply put, that’s why the market crashed. At some point, the big hedge fund guys realized, “Oh man, we have some crazy stocks here in our portfolio! They are overvalued!” And so the big guys are taking some profits off the table and SELLING these heavily overvalued companies. And if they “only” sell shares of these 7 companies, then it drags the whole Nasdaq down. So will the market continue to move lower? Earlier this year, the NASDAQ lost 30%. Can this happen again, or is over after this 10% drop? Well, we had this pandemic, and NOBODY knew how it would affect our economy. So the big guys did what they usually do when there’s uncertainty: SELL and sit on a pile of cash, like Warren Buffet. But you’re not earning any money on cash. At some point, you need to invest the money again in the market. And once we had a better idea of how the virus affected our economy, the big guys started buying again. So if we look at this “flash crash” in September 2020, here’s what happened: The big guys – a.k.a SMART MONEY – noticed that some of the stocks that they purchased went up too much, and they sold them to take profits. But they can’t sit on the cash for long. They need to earn money, so they invest it again after values are back to normal. And that’s what we are seeing today: It’s called “buying the dip.” Summary: Why Did The Markets Crash? You should now be familiar with both EPS (Earnings Per Share) and the PE Ratio (Price Per Earnings). And you know that the big guys – the smart money – they’re keeping a close eye on these numbers. If they get too high, then they SELL some stocks and realize a profit, and they buy companies with a lower PE ratio. And THAT is why the markets crashed for a few days – and why they are bouncing back right now.
TVC:NDQEducation
by rockwelltrading
Stock Market Crash Fall 2020Based On Video Recorded On Wednesday, September 2, 2020 At the time of writing this, the markets are at all-time-highs… but are we setting up for a Fall edition to the 2020 stock market crash? If you’ve followed me for any length of time you’ll know I’m not one for making bold market predictions, based on gut feelings. I take a systematic approach to trading. So let’s just start by looking at the facts: 1.) This November, we have the Presidential Election. This is and has always been a significant event for the markets. I’ve found a website (Isabelnet) that has charted what has happened over the last 23 elections. Has The Stock Market Crashed The Fall Before An Election? Let’s take a look at what historically happened in the 3 months leading up to the election. Over the last 23 elections, 14 of those times the markets have gone up and 9 times it went lower. The moves to the downside haven’t been what I would consider significant, with one exception: The 2008 Financial Crisis But because that was a unique circumstance, I would consider it a bit of an anomaly. Other than that, the losses are less than 3.5% and the gains are anywhere between 2.5 – 8%. So over the last 92 years, the markets have gone up 61% of the time. Based on this data alone, you could make the prediction that it’s very unlikely we will see a stock market crash this fall… at least before the elections. And there’s one REALLY simple reason for it: Trump wants to be re-elected. And right now he has a great story to tell: “Look at the markets. They are at all-time highs and I did that!” And look, I could care less what political affiliation you have, this is just my take on it. It seems that the stimulus packages as well as the Fed measures that they implemented seem to be working. So Trump would be stupid to “rock the boat” right now. Yes, we still have a conflict with China. But in reality, that’s ‘piddle – paddle’. It’s like 2 girls in a sandbox saying: “You’re mean!” – “No, you’re mean!” – “You’re ugly!” – “No, YOU are ugly!” And right now I don’t think that Trump will do anything that could potentially send the markets sharply lower, because THAT would likely decrease his chances of being re-elected. On the horizon, I don’t see any other major events that could potentially crash the markets. Looking at the economic reports, for the most part, everything is being reported better than expected. Some additional good news is that pretty much all companies in the S&P 500 have reported earnings for the past quarter. And 84% of the companies reported better than expected earnings. So all of this is positive news for the markets, and it seems that we are handling the pandemic well, at least economically. So what COULD send the markets lower right now? One thing: PROFIT TAKING. No market can go up forever! At some point, there will be some profit-taking and the markets will pull back. The key question that remains is: How Big Of A Drop Could The Markets See – Are We Talking Crash Or Pullback? So there are 2 tools that I like to use to get an idea of how much the markets could potentially drop: 1.) Fibonacci Retracements : Now I’m the first to admit I’m not an expert in Fibonacci, and there are probably much better ways to do it, but here’s how I do it. Grabbing the Fibonacci Retracement tool, I’m going to find the low from the Pandemic Crash and run from that low to the first high before a noteworthy pullback as you can see from the image below. Looking at it, you’ll see that from the low to high swing the SPX found support around .50% retracement, or a 50 percent retracement of that swing. Make sense? For me, this is just an easy way to give me an idea of where we might find support during a pullback. So let’s take a look at the most recent pullback. And we’ll run the tool from it to the current high, to give us an idea of where we could end up if we see some profit-taking: From what I can see, I would expect the S&P to find support around the 3500 or 3400 levels. 2.) Missed Pivot Points : The second tool that I like to use is one created by my friend Rob called the “Missed Pivot Points.” So if you’ve never heard of “Pivot Points” before, it’s the high + the low + the close, divided by 3. So what he likes to look at are Monthly and Weekly Missed Pivots Points. In TradingView they’re available as a free indicator. When we plot them you’ll see that they align right around the same area of the Fibonacci Retracements we just ran. So Are The Markets Going To Crash In The Next Three Months? Everything is possible, but based on my analysis, it’s not likely we’ll see a full-blown stock market crash this fall 2020. But as we’re all aware at this point, 2020 has been full of surprises. I do believe that we could see a correction to these levels I discussed (3400 or 3500), but based on the analysis that I’ve discussed, it’s more likely that we will keep drifting higher.
NASDAQ:TSLAEducation
by rockwelltrading
2
#NASDAQ - Too good to be true?What a show, Nasdaq 100 lost almost 11% in a single week after a massive sell-off and everyone started to blame Robinhood for selling data, despite forecasts and warns of hundreds of analysts saying that the bubble will soon blow and all the tech stocks are overvalued, so.... Greed is one to blame? This is just my opinion, you decide whether to agree or not. From the technical perspective NDX is currently testing a dynamic resistance (dashed line) though remains above the 11300 support zone. If it takes out the dynamic resistance with a massive green candle, then it will bounce to 12000. If it breaks below the 11300, then it will drop to 11150 - 11098 in short term. The best scenario is to drop down to 10400 levels to penetrate the 100MA and then bounce back towards new highs. If Rumors on Robinhood continue growing and investigations are conducted, then we might witness the largest bubble explosion in the history.
U
by azizelliott
Stock Market Crash or Pullback?If you have been a follower of my work, I have been saying that stock markets will only be moving higher as it is the only place to chase yield in this world. We are setting up for a parabolic move higher. The past two trading days, saw big drops on the US equity markets...amusingly, the perma bears are back, and the financial media quickly shifts their stance to "beginning of a bear market". A good example of why financial media is REACTIONARY. If what the financial media and mainstream media told you was true, then everyone would be rich! But the markets make their moves way before...and in my humble opinion, adheres to market structure which is the way I approach all markets. After the S&P 500 broke out, we say money chasing the breakout. Perfectly normal. Likely a lot of daytraders, but you can make a good case that domestic funds started increasing their allocation of US stocks as the bond market was showing us that money was leaving the safety of the bond markets. Following the asset allocation model of stocks and bonds that funds utilize, we can predict that this money cannot remain in cash forever, and that it was going to the stock markets. Certain fund managers did not chase US stocks higher because they believed the bottom in equities was not it. That there was another leg lower coming which would take us below February lows. Well, the stock market officially ended its shorted bear market in history, and started a new bull market with the new highs. If you were a fund manager who did not participate in that rise, you really have no excuse now. This money will enter US stocks, and I argue foreign money too, which will cause a parabolic move. Back to the chart. After days of moving higher, you could just feel the euphoria and the FOMO. It just felt a pullback was necessary. In fact, this move down to me was just that. A pullback. Remember: when break outs occur, it is perfectly normal for price to retest the breakout zone before continuing higher! Ideally we want this to happen a few days after the breakout, but there are times when momentum carries price higher to another resistance level BEFORE selling off to retest the breakout zone. Notice price action on Friday too. We had a large red day which broke below a major support level on the longer term charts. Many traders chased this move lower. They thought this was the big sell off. Look at how the candles closed. Large wick candles with the body closing above support. This is a fake out, or a bull trap. Look at the Nasdaq and the Dow too: The Dow is still holding a major support/flip zone. Two important lessons here: 1) This is why we look at the long term charts to spot market structure trends and key zones. 2) We wait for candles to CLOSE before entering positions or determining whether a break down/out is happening. This is very important as you many traders lost money thinking this was the large stock market crash. I have said many times that stock markets are the only place to go for yield. The fundamentals have not changed. The real economy does not matter. There will be more cheap money for a very long time. In fact, the Fed and other western central banks cannot hike interest rates anymore. The amount of debt that government and citizens have had to take means a slight rise in interest rates will destroy them. This means interest rates will remain close to 0 for a very long time, and it is much more likely we cut interest rates to the NEGATIVE (following Europe and Japan and others) which would allow government to service the debt as it is likely more spending programs and benefits will be coming. Essentially, the monetary policy side has used all their ammunition. Sooner than later the Fed will announce they are actively buying stocks to keep markets propped. Now the onus is on the fiscal policy side, and we can deduce that governments will announce more programs to try and spur the economy and keep people afloat. With all these things in mind, it is safe to say the party is not over. Will there be a time when markets crash? Yes. And it will be the largest wealth transfer in human history. Wall Street knows the party is not over. Central Banks will do whatever they must to keep markets propped, but there will be a time for the reversal. For our crash, our eyes will be on the bond markets. One day, bonds will sell off which will cause interest rates to spike (likely into double digits). This will be our signal for a stock market crash. Right now, most central banks are buying bonds and suppressing interest rates. When they are ready for the culling and an implementation of a new system, they will sell. The other possibility comes from a black swan event. I think this will come mainly from some sort of geopolitical news regarding US and China. Although Turkey and India and China are other hot spots. If some sort of shooting war begins...markets would not like that. Maybe a second wave of Covid? I am not too sure, since we are seeing a lot of questions being raised about the testing and deaths being wrongly attributed. Also, a vaccine would cause markets to pop... we found out the Chinese have had one since July and have been innoculating the military, health professionals, and border guards. Finally, what about the US elections? I do think that whatever side wins, the losing side will not accept the results. There will be major violence on the streets of America. This plays in with my confidence crisis scenario (a confidence crisis in central banks, governments, and the fiat money) and why you want to be holding hard assets like Gold and Silver. But the fact is, regardless of who wins, more cheap money is not going to change. I would even argue markets would shoot higher on a Biden victory because it would mean even MORE cheap money. It is really going to be crazy times ahead, and I still do not think we have seen the parabolic move in equity markets yet. Once the Dow breaks out into all time new highs, we are closer on that road. But going forward, unless we see some sort of topping pattern from here, such as a double top or head and shoulders, do NOT short this market!
OANDA:SPX500USD
by Uncharted-FX
2
Is the Stock Market going to CRASH?!?!Is the stock market going to crash?!?! I reckon about 50 people a week ask me this question! The reality is that we have never experienced this kind of crash before, we have never fought COVID before and we are seeing a huge amount of stimulus from our governments. Even the most experienced traders and investors are struggling to predict the market. Here is what I know: • It's a crazy time, with things changing daily • The market has recovered well since the crash, but it's not yet "technically safe" • We are going through a digital evolution, meaning that things are different. Business is different. Life is different. • Companies are announcing loss in sales and increase in profits at the same time. Profit is what matters. • We are never going to see "work" in the same way again. • There is a huge amount of misinformation in the media • There is an even bigger amount of misinformation coming from the public (the new media - how ironic) • The stock market responds to supply and demand. You might think a stock is overpriced (and it may be), but if another person is willing to pay that price, is it 'overpriced', or just... 'priced'? • A company is not it's stock price. Read this 3 times. • An index is not a company. Read this 3 times. The world is changing and evolving. Here is my suggestion to investors and traders: Don't try to predict. Instead get really good at adapting and even better at reacting. Use technology to your benefit. Computers are better than us at processing things, we are better at strategy. Manage your risk every second of every day. Never stop doing what you love in he trading and investing world, instead, proceed with caution and have an exit strategy. Technicals: The below chart is how I personally see the ASX right now. We are looking very bullish technically, with a huge ascending triangle on top of a trip wire on the daily. We also have an ascending triangle on the 4hr. We are pressing against resistance right now. A push through could see us making new recent highs and moving up a couple of hundred points. If we do, be careful as we are going to hit a major supply zone, which could trigger a reversal. A push through this second level of resistance could see the market heading in a longer term positive direction. Marked on chart. Another thing to note, we are right on the 61.8 Fibs, a prime position for a reversal to occur. Does this mean the market is going up? No it doesn't, but it looks like it wants to. The market is a flaky, fickle, 2-faced, sadistic creature. Remember what you are dealing with. Be careful, its not your friend and it doesn't care about you. Does this make you feel bad? Why? Now you know what you are dealing with, you can milk it for everything it's worth. Your role as a trader is to take money from the market and put it in your pocket. Don't kid yourself, this was never a friendship. How I read it: It could easily go either way right now. Risk management is key. Invest in sectors that stand to benefit whether the crash happens or not. Read the following aloud to yourself: • Risk management is my number 1 priority • I'm going to do my own research and make my own choices • My friends and family aren't qualified to give me financial advice If you prioritise risk, you minimise loss. Its really that simple. Here's the thing, we just don't know what will happen. No one does. All the time you spend searching for someone to give you that answer could have been spent finding your next major trade. Spend it wisely. A couple of things to be aware of: - Australia follows the US. Elections are coming soon in November. - Jobkeeper is allowing companies to keep operating, it's potentially ending next March. - All business is changing. What you know today may not apply tomorrow. With that being said, I wish everyone an amazing week trading and investing! • Learn • Manage Risk • Adapt • Remove the ego • DYOR • Invest in what you know • Go your own way Have a great week 🚀
ASX:XJOEducation
by glennleese
43
Bulls Don't Get Your Hopes UpRetail is plowing into USO, tech, and US stocks. Even with the "Fed Liquidity", the 1st quarter of 2020 was the largest QoQ contraction in credit conditions EVER. The fundamental economic data is putrid. The worst ever. and REMEMBER, corporate profits peaked in late 2018, which is also when the Russell 2000 entered a bear market. The SPX was saved from crashing by a Fed that slashed interest rates in 2019, but with this biggest global shock we have ever seen and with money supply velocity at ZERO, there's nothing that traditional monetary policy can do for the markets. Markets bounced off of hope and optimism given to them by Mnuchin. Don't trust the administration. Things are about to get UGLY UGLY
SP:SPXShort
by Ludwig_Von_Mises
20
GDP? More Like Debt-Financed ConsumptionNotice the time period where the rate of change began to significantly increase. Sad that TV doesn't have the data but if you go and look, inflation from 1700-1900 was extremely stable. Not the "2%" per year inflation of today, was more like gradual deflation over time, with certainty that your money would be worth the same 100 years from now. During the classic gold standard era, from 1870-1910, real growth averaged 8-10% per year, and we had 3% deflation per year. The banking system of today is based off of printing lots of money, getting caught in a liquidity trap, and then being at risk of a major deflation because you thought you were smart enough to inflate an asset bubble with no consequences. That's where we are at right now. Very similar to 1929.
FRED:CPIAUCSL
by Ludwig_Von_Mises
Dow Jones Index Technical AnalysisLet me start off by saying I hope each and everyone of you are safe and healthy. Some of the craziest s*** has happened within the last few weeks including oil futures going negative -44 per barrel. While everyone is distracted with the FED throwing in fridge after sink and the economy halting, a lot of people seem to have forgot about earnings. Knowing earnings was just around the corner after this insane dump, any experienced trader would have know prior to earnings that volatility and typical speculation would pick up. That being said, all this has resulted in a pretty massive rebound (DJI 29%) (SPY 26%). These next few days are extremely important, whether you are planning on building a long-term chair or play some options. All I have to say is take advantage of the opportunity presented and money will come eventually. I'd love to hear what you guys have to say! Share your charts, thoughts, and feedback below. DotcomJack | DO NOT TRADE THIS
TVC:DJIShort
by DotcomJack
1
Is the next Major Crash Beginning?Is the next big crash starting? OANDA:SPX500USD I've been watching the S&P closely for the last month during our recovery phase. It's been a great ride up, but today it's starting to look like the cracks are once again forming. The below analysis is as I see it. This is not advice. Please do your own research before entering any trade. Signs of a potential reversal: 1. We have recovered to the point of reaching the "Golden Pocket", which is the idea place to open a short for minimizing risk, between the 50 and the 61.8 Fibs. 2. We have seen a bull flag formation on both the Daily and the 4hr, with both breaking down and out during the last trading session. 3. We rejected off the 50 day moving average on the Daily. 4. Moving average on Volume is reducing. 5. MACD line has turned and looks poised to cross down below the signal line. 6. CCI is trending down and fallen out of upward channel. None of this guarantees that a crash is coming, but it's certainly got me interested. Potential SHORT Trade Setup ENTRY: 2740-2770 (Anywhere here) STOP LOSS: 2970 - 6.89% (Clear those fibs) TAKE PROFIT 1: 2320 - 16.73% TAKE PROFIT 2: 2176 - 21.70% TAKE PROFIT 3: Let run RISK:REWARD: 1:2.4 As per normal risk management practice, once the trade starts moving, reduce your SL and potentially apply a Trailing Stop in a fast moving market. Please DO YOUR OWN RESEARCH!! Happy Hunting!
OANDA:SPX500USDShort
by glennleese
Prepare to Buy the Dips in Gold & Gold StocksKirkland Lake is down 40% from gold's September high of 1550 yet Gold is pushing $1700. Its down 18% from the market meltdown. I suspect this means that if gold gets sold in the coming crash that the dip in gold and gold mining stocks will be limited not extended. It won't be like 2008. A 60% correction from September's high puts Kirkland at $20/share. I will be buying that if we even get that low. If we get lower than that consider it a blessing. Kirkland has some really amazing All-In-Sustaining-Costs to getting gold out of the ground. $2000 - $3000 gold will be incredible for Kirkland lake.
KLong
by Ludwig_Von_Mises
1
US Stock Market Making 2nd Attempt at Parabolic Blow-Off TopI believe we will get either a blow-off top in the S&P or a fundamental event that kills the expansion, sending price below the magenta rising support line. If the Fed is too slow to expand the balance sheet, then stocks can correct significantly until the Fed eases adequately. If Trump wins and the Fed expands their balance sheet in 2020 at a fast enough pace, then spx will enter a blow-off top mania. If Bernie or Warren win, a significant correction will take place but SPX may bounce once rates hit zero or negative. If the Fed is slow to move (quite likely) then SPX will swing really violently and could get scary for some investors and traders In my view, the SPX is only worth trading, it is not worth investing in. Now is the time to be getting out of US stocks and US dollars and into emerging markets and commodities. Sometimes being a better investor means passing up immediate returns via central bank fueled irrational exuberance and waiting for an even better opportunity later once the music has stopped and everyone has been exposed. Impossible to predict the top, so better off not fully participating.
SP:SPX
by Ludwig_Von_Mises
1